Who were Phil and Dawn, and what were they trying to accomplish?

Phil and Dawn had worked their whole lives on their Nebraska hay farm. When retirement came into view, they wanted to sell their land, simplify their lives, and create steady income. They found two offers on the table: one for $6 million with seller financing, and another for $5.7 million in cash.

At first glance, the $6M deal looked like the winner. But as their broker quickly realized, the tax bill would make that “bigger number” far smaller.

What’s the problem with seller financing on a farm sale?

Seller financing sounds simple—steady payments, interest income, and no need for the buyer to go through a bank. The problem is taxes.

With seller financing:

• Depreciation recapture is due immediately.

• Capital gains taxes are spread out over the note.

• The seller is paying taxes on money they haven’t even received yet.

For Phil and Dawn, the $6M seller-finance deal meant $1.35M in taxes owed, cutting their net down to about $4.65M—and that’s before worrying about whether the buyer would ever make good on the payments.

Why did their broker suggest a different path?

Phil and Dawn’s broker wasn’t just chasing the biggest number. He was a trusted neighbor from their same small Nebraska town, and he cared about their long-term outcome.

He encouraged them to consider the $5.7M cash offer instead, which could qualify for a 1031 exchange. Before finalizing, he called a representative from Iron Ridge Advisors to confirm whether a Delaware Statutory Trust (DST) might be the right fit.

How did the DST change everything?

By choosing the $5.7M cash sale and rolling the proceeds into a DST, Phil and Dawn:

• Deferred every dollar of their $1.35M tax liability.

• Kept the full $5.7M working for them instead of losing equity to taxes.

• Spread their wealth across a diversified DST portfolio of multifamily, storage, and senior housing.

• Secured potential monthly income with no landlord duties.

• They protected their legacy by structuring the DST so heirs could inherit separate DST units of wealth without conflict, and with a step-up in basis, the deferred taxes would be wiped out permanently.

  Did “taking less” actually give them more?

Yes. Here’s the math:

• $6M Seller Financing (after taxes): $4.65M net equity

• $5.7M DST Sale (after taxes): $5.7M net equity

Even though Phil and Dawn “took less” on the sale price, they actually ended up with over $1 million more in net wealth, plus predictable monthly income for retirement.

What’s the takeaway for other landowners?

Selling farmland or ranchland isn’t just about the sale price—it’s about what you keep after taxes. Seller financing may look like a win, but hidden tax traps can erase the advantage.

With the right strategy, like a 1031 exchange into a DST, landowners can defer taxes, protect their equity, and turn years of hard work into potential retirement income.

Phil and Dawn’s story proves that sometimes, taking less upfront and exchanging into a DST is the smarter way to come out ahead.

Disclosure: In the interest of protecting the client, real names and exact numbers were not used. However, the concept of what happened is accurately reflected in this case study. This is a hypothetical illustration based on a real scenario. Results may vary. This is not an offer to buy or sell securities. Investors should consult with their own tax, legal, and accounting advisors before making any investment decision.